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The Gig Economy Makes the Switch From Clicks to Bricks

By James King

June 29, 2017

Nothing has disrupted the UK business landscape over the last few years as much as the gig economy. Five years ago few people in the UK would have heard of Uber. Today a healthy chunk of the population no longer hail a cab (especially in London) – they ‘Uber it’.

Uber isn’t the only gig economy business that’s been making waves in the UK. Airbnb and food delivery business Deliveroo – to name but two – have also come along, created new markets and left traditional brands lying in their wake. To date these companies have had little direct impact on the property sector – although some of the world’s leading hotel groups regularly cite Airbnb as the reason some parts of their estates aren’t performing as well as they have done historically.

The move to bricks

However, there has been a recent noticeable shift in the strategies of these gig economy companies. It’s a shift that started very slowly and quietly last year when Deliveroo opened a series of ‘RooBoxes’ that allow traditional bricks and mortar restaurant brands to set up dedicated kitchens for the home delivery of their food and drink.

Then in April this year the company announced it was looking for 30 sites across the UK for a concept it branded Deliveroo Editions. The company is looking for leasehold sites that can accommodate kitchens with a footprint of 2,500-4,000 sq ft. Deliveroo says it will consider light industrial locations, car parks, service yards, redundant spaces and development land with its priority being sites within the M25 and in cities like Nottingham, Manchester, Leeds, Newcastle and Bristol.

It already serves many of these locations, but many of the restaurant operators it works with lack sites in these areas. So Deliveroo Editions facilitates the initial geographical expansion of selected brands without signing up for lengthy, expensive high street leases.

As Scott Collins, co-founder of hip burger brand MEATliquor puts it: “Deliveroo Editions presents us with the perfect opportunity to extend our reach and test the waters in areas where we may not open bricks and mortar restaurants.”

Uber eyes up car parking sites

Close on the heels of Deliveroo’s announcement news broke that Uber was also in the market for land that would allow its drivers to park up around major transport hubs. At the moment there is a dedicated area at Heathrow Airport where private hire drivers can park so that they don’t cause congestion around the airport while waiting for their fares and Uber is considering doing a similar thing with its own car parking sites around airports like Gatwick and City.

It’s an interesting departure for gig economy businesses that have thrived due to their lean business models and low overheads and it’s one that many members of the property industry are watching with interest as there is potentially huge scope for further growth. Some people might question whether or not these businesses are going to end up taking meaningful chunks of space, but if somebody had said a decade ago that by 2017 Amazon would be opening bookshops and grocery stores across the US, the comment would have been met with a bemused look.

It’s difficult to see what property requirements some of the other gig economy businesses might unleash in the coming years – Airbnb branded hotels anyone? – but given the tremendous growth rate of this new sector it’s certainly going to be an interesting trend to track.

ABOUT

James King

James King is a Senior Director at VTS. Prior to joining VTS, James was an Associate Director at CBRE, where he specialised in advising Central London landlords on leasing and development in the firm’s market-leading Landed Estates retail team.

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